Only a third of academy trust finance chiefs say a 3 per cent teacher pay rise will be affordable next year on current funding levels, according to survey findings seen by Tes.
When trust finance bosses were asked how big a pay rise would be affordable, just 5 per cent of those polled said a 4 per cent increase would be affordable. But more than one in five said that even a 2 per cent rise would not be.
The findings come as the sector awaits a decision on the 2024-25 pay award for teachers, and how this will be funded.
More than three-quarters of trusts are eating into their financial reserves to cover costs - and in many cases this was not planned, according to the survey of more than 100 trust finance bosses by multi-academy trust finance specialists, IMP Software.
This chimes with the findings of a Tes investigation that showed a 42 per cent increase in the number of MATs with reserves at levels that suggest “financial vulnerability”, according to the Department for Education’s own definition.
School funding: teacher pay rise fears
Most of the chief financial officers surveyed by IMP (62 per cent) said their trust was forecasting an in-year deficit for 2023-24. A majority of these said the outlook is now worse than projected at the start of the year.
Around half said their trust’s financial situation will change in 2024-25 and, of those, more than three-quarters felt their position would get worse.
Most CFOs (88 per cent) said the funding levels planned for 2024-25 were not enough for their trust.
The Institute for Fiscal Studies has said schools need £700 million more in their budgets for 2024-25 to allow them to meet expected cost rises.
MAT chiefs have previously warned that funding levels for 2024-25 are “spectacularly inadequate” in terms of allowing schools to cope with rising costs.
Almost every respondent to the IMP survey said rising staff costs were their biggest financial challenge.
A major threat to trusts’ financial sustainability is the way that pay awards are decided after trust budgets are set, according to CFOs speaking to Tes.
Simon Bentley, CFO of Birmingham Diocesan Multi-Academy Trust, which runs 18 primaries and a secondary school, said his trust’s budget last year had built in a 5 per cent pay award but had to be completely reworked after the government announced a 6.5 per cent rise just “two hours” after the budget was presented to the board.
And he warned that this uncertainty impacts on the provision of education.
‘Walking through spaghetti’
Jill McCall, CFO at the University of Winchester Academy Trust, which runs five primary schools, highlighted that trusts have to provide three-year budget forecasts to the Education and Skills Funding Agency without certainty on pay or funding.
“This lack of clarity around funding is so frustrating and it does feel as if you are walking through spaghetti at times,” she said.
More than half of survey respondents said their trust was financially vulnerable.
As a result of rising costs, 79 per cent said they have had to dip into reserves over the past 12 months to cover costs.
The most common spending cut that trusts expected to make was to support staff budgets.
And almost every respondent (96 per cent) said their trust lacked sufficient money for special educational needs and disabilities provision.
Lack of capital funding
A majority of trusts (70 per cent) said they had capital building works they needed to complete that they could not afford.
Ms McCall said trusts were being undermined by uncertainty and difficulties accessing capital funding. “We are bidding for a pot of funding that is getting smaller each year,” she told Tes.
Two schools at her trust had projects approved through the Condition Improvement Fund, but this was put on hold by the DfE “just days before work was due to start during May half-term, and we still do not know whether this funding will be forthcoming”, Ms McCall said.
This creates “additional concerns over legal liabilities where contracts for work are in place and invoices received”, she added.
Mr Bentley said his trust had a £4 million shortfall over a 10-year period in terms of the cash needed “just to address condition issues, making sure our schools are safe, warm, dry places, notwithstanding the fact that we also want to progress improving our school environments”.
“So each year the process is deciding which leaky roof we can afford to fix and which roofs are going to keep leaking for another year or two,” he added.
What will Labour do?
The new Labour government has not yet indicated whether it will make any changes to core school funding.
The previous Conservative government had recommended a lower pay rise for teachers this year but delayed a decision until after the election.
The IMP survey was conducted in June, and received 101 responses. Some 74 of these were from CFOs, while other respondents included chief executives, school business managers and heads of finance.
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